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TMI Blog1975 (5) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... termination the facts which have given rise to this Writ Petition have to be stated. The petitioner. Messrs Mohan Meakin Breweries Limited, Mohan Nagar, Ghaziabad (U.P), is a company registered under the Indian Companies Act. There are three respondents to the Writ Petition. The first respondent is the Union of India through the Secretary. Ministry of Food and Agriculture, Government of India. The second respondent is the Chief Director of Purchase, Army Purchase Organisation, Ministry of Food Agriculture. Government of India. The third respondent is the Chief Pay Account Officer. Ministry of Food Agriculture, Government of India. (3) The petitioner-company, by a letter (Annexure '1) dated December 1. 1971, offered to supply 6,00,000 litres of Rum to the Government of India for defense Services at the rate of Rs L83 per litre. The second respondent wrote a letter (Annexure U). dated December 4, 1971, appreciating the said offer, and again wrote another letter (Annexure III), dated December 7, 1971, asking the petitioner company to mention its delivery schedule for 6,00,000 litres of Rum. The petitioner company sent a reply (Annexure IV), dated December 15, J971. and by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be held liable for any alleged breach of contract. The petitioner company also sent a telegram (Annexure XXIII) and letters (Annexures Xxiv to Xx VI), dated August 4, 1972 September 14, 1972, and October 18, 1972, respectively. The petitioner company also sent a letter (Annexure XXVII), dated March 7, 1973, requesting the second respondent to release the bank guarantee which had been given against its open offer to supply 6,00,000 litres of Rum. (4) According to the petitioner company, the respondent did not send any reply, and it, Therefore, sent reminders (Annexures Xxviii. Xxix and XXX), dated May 4, 1973 May 28, 1973, and June 28, 1973, respectively. Thereafter, the petitioner company received a letter (Annexure XXXI), dated August 20, 1973, from the first respondent which reads as follows :- REGISTEREDA/D No.J. 13018/5/29/72/Purll Government Of India Ministry Of Agriculture Department Of Food (ARMY Purchase ORGANISATION) New Delhi-1, dated 20th August, 1973 To M/s. Mohan Meakin Breweries Ltd., Liaison Office 154, Jorbagh, New Delhi-3. Sub: Supply of Rum against this Department A/T No. J. 13018/5/ 29/72 Pur It dated 29-1-72. Dear Sirs, In continuation of this Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents as contained in the aforesaid letter (Annexure XXXI), dated August 20, 1973, and requested the respondents to recall the action. As the petitioner company did not receive any further reply, it filed the present Writ Petition praying that the impugned action of the respondents as contained in their letters (Annexure XXXI), dated August 20, 1973, and Annexure Xxi, dated July 20, 1972), be quashed as being unwarranted, illegal, mala fide, against principles of natural justice, without jurisdiction and without authority of law. The petitioner company also prayed that the illegal demand contained in the letter (Annexure XXXI), dated August 20, 1973, be declared as void and ultra virus the Constitution, and vocative of the petitioner's fundamental rights guaranteed by Articles 19(l)(f) and (g) and 31(1) of the Constitution of India, that the respondents be restrained from in any manner adjusting or recovering the amount of ₹ 2,57,337.00 from/out of the pending or future bills of the petitioner, that the amounts already withheld be ordered to be refunded to the petitioner company, and that the respondents be directed to release the bank guarantee amounting to ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ene in the Writ Petition. We allowed the prayer and heard arguments of Mr. Singhania as intervener. It has to be noted that the petitioner prayed in the Writ Petition (1)that the action of the respondents as contained in their letters (Annexures Xxi and XXXI) dated July 20, 1972, and August 20. 1973, be quashed; (2)that the demand for payment contained in the letter (Annexure XXXI) dated August 20, 1973, be declared as illegal and void and ultra virus the Constitution and violative of the petitioner's fundamental rights under Articles 19(l)(f) and (g) and 31(1) of the Constitution of India; (3)that the respondents be restrained from in any manner adjusting or recovering the amount of ₹ 2,57.337.00 from out of the pending or future bills of the petitioner; (4)that the amounts already withheld be ordered to be refunded to the petitioner: and (5)that the respondents be directed to release the bank guarantee amounting to ₹ 54,900.00 . The contention of the respondents is that the said prayers of the petitioner relate to the rights and obligations of the parties arising out of the contract between them. that the jurisdiction of this High Court under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no question of any such statutory obligation in the matter of the claim of the Government in the present case. The rights and obligations of the parties are purely contractual. Further. when the Government merely made a claim based on the allegation of a breach of the contract by the petitioner company, we are unable to understand how it can be said that any violation of Articles 19(l)(f) and (g) and 31(1) is involved in such a claim. (7) The prayer of the petitioner (in the first prayer) for the quashing of the action of the respondents as contained in the letter (Annexure XXI), dated July 20, 1972, also stands on the same footing. In that letter, the respondents purported to cancel the acceptance of the tender at the petitioner's risk and cost and subject to recovery of extra amount that may be incurred by the Government in repurchase of the cancelled quantity of Rum. According to the petitioner company, the said cancellation was not justified. Even assuming it to be so, the alleged wrong action of the Government, would only amount to a breach of the contract on the part of the Government rendering the Government liable to pay damage for the breach. This is a matter to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng any sum then due or which at any time thereafter may become due to the contractor under the contract or any other contract with the purchaser or the Government or any person contracting through the Secretary, if such sum even be not sufficient to cover the full amount recoverable, the contractor shall on demand pay to the purchaser the balance remaining due. For the purpose of this clause, where the contractor is a partnership firm. the purchaser shall be entitled to recover such amount by appropriating in whole or in part any sum due to any partner of the firm whether in his individual capacity or otherwise. The aforesaid clause came up for interpretation before the Supreme Court in Union of India v. Raman iron Foundry and (mother. [1974]3SCR556 ). The said decision dealt with two cases, one of Ranian Iron Foundry and the other of M/s. Air Foam industries (P) Ltd. The facts in the case of M/s. Air Foam Industries only were set out in the decision as they were sufficient to bring out the points for consideration in both the cases. M/s. Air Foam Industries entered into a contract with the Union of India to supply certain quantity of foam compound. The said contract was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Air Foam Industries in respect of certain other contracts Apprehending that the Union of India would appropriate those amounts towards recovery of the amount's of damages claimed by it even though the said claim for damages was disputed by M/s. Air Foam Industries and was pending before the arbitrator. M/s. Air Foam Industries filed an application praying that the status quo should be maintained and the Union of India should be restrained from recovering its claim for damages from the amounts due and payable by the Union of India !o M/s. Air Foam Industries in respect of the other contracts. The said application was heard by a learned single Judge of this High Court who took the view that clause 18 did not authorise the Union of India to appropriate the amounts of any other pending bills of M/s. Air Foam Industries towards satisfaction of its claim for damages unless such claim for damages was either admitted or was adjudicated upon by arbitration or by suit in a civil court. Accordingly, the learned Judge allowed the application and issued an interim injunction restraining the Union of India from effecting recovery of the amounts claimed to be due from the other pending bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the heading and is the dominant idea running through the entire clause 18, that the language used in the body of clause 18 also supports the said view, that the clause does not lay down any substantive rights and obligations of the parties under the contract, that it is merely intended to provide a mode of recovery of ''a claim for payment of a sum of money arising out of or under the contract , that it, Therefore, postulates a claim for a sum which is due and payable, i.e., presently recoverable, and may be recovered by the mode therein provided, that it is difficult to believe that the contracting parties should have intended that even though a sum is not due and payable by the contractor to the purchaser under the contract, the purchaser should be entitled to recover it by adopting the mode set out in clause 18, and that clause 18 applies only where the purchaser has a claim for a sum presently due and payable by the contractor. After interpreting clause 18 in the above manner, the Supreme Court pointed out that the claim in the case before them was admittedly one for damages for an alleged breach of the contract between the parties, that such a claim for damages did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner company, that the portion of the letter (Annexure XXXI), dated August 20, 1973, in which the respondents purported to adjust or deduct the security amount of ₹ 54.900 and threatened to recover the balance of ₹ 2,02,437 from the pending bills and directed the Chief Pay and Accounts Officer to recover the aforesaid claim of ₹ 2.02437 from the pending bills, etc. of the petitioner company, is liable to be quashed as being an executive. action de hors the contract and without any right or power, and that the third prayer of the petitioner company is to be allowed and the Union of India is to be restrained from in any manner adjusting or recovering the amount of ₹ 2,57,337 from out of the security amount and the pending or future bills of the petitioner company. (14) We shall now refer to the two cases mentioned in the order of reference. The first case is M/s. Air Foam Industries (P) Ltd. New Delhi and another v. Union of India and others, 1974 D.L.T. 120. In that case M/s. Air Foam Industries (P) Ltd. which carries on the business of manufacturing air foam compound, entered into a contract in 1968 with the Director General, Supplies and Disposals for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney was due to the company from the Government, its remedy was in the ordinary course of law by civil action. It has to be noted that the decision concerned itself only with the question as to whether the amounts due to the company under the further contract? of 1970 could he directed to be paid under Article 226 of the Constitution. The decision did not deal with the question as to whether the Government could recover or adjust the amount claimed by it as general damages for an alleged breach of the contract of 1968 from out of the amount due to the company under the pending bills in respect of the contracts of 1970. The second case is Marwar Tent Factory, etc. v. Union of India, 1974 RLR 218(' '). In that case, Marwar Tent Factory agreed to supply tents of a total cost of ₹ 62.03,650 to the Union of India. The terms and conditions applicable to the contracts were those contained in the General Conditions of Contract Form No. D. G. S. and D. 68 Alleging a breach of a warranty of the contract, the Director General, Supplies and Disposals called on the factory by a letter to pay a sum of ₹ 92,363 as compensation, and intimated that if the payment was not made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recoverable debt due from the petitioner and the direction to the Pay and Accounts Officer to recover r this amount from pending or future bills of the petitioner is illegal and without jurisdiction, and on that account inoperative. This shall, however, not prevent the respondents from having their claim for damages, if any, referred to in this letter duty assessed and quantified in accordance with law and then enforce recovery and payment of the amount adjudged to be due to them from the petitioner by resorting to clause 18 or 18-A. (15) It has to be noted that this decision dealt with the question with which we are concerned, namely, the right or power of the Government to recover or adjust its disputed claim of damages for alleged bench of contract from out of the pending or future bills of the contractor, and that. the view taken by the Division Bench was quite the same as the view taken in the latter decision of the Supreme Court in the case of Union of India v. Raman Iron Foundry (supra) and the view taken by us in the present case. It has also to he noted that. there is no conflict between the aforesaid decisions of the two Division Benches. (16) In this connection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment by way of price payable for the goods supplied is purely a claim for money, and that the remedy of the company is in the ordinary course of law by civil action and not by asking for a mandamus under Article 226 of the Constitution. In the present case, as already pointed out, there is also the remedy by way of arbitration under clause 24 of the terms and conditions. Further. there is the decision of the Supreme Court in the case of Raman Iron Foundry (supra), in which it was observed in dealing with the first of the two grounds urged on behalf of the Union of India as follows:-- The appellant (Union of India) can still refuse to pay such amounts (amounts due under other pending bills) if it thinks that it has a valid defense, and if the appellant does so, the only remedy open to the respondents (Raman Iron Foundry) would be to take measures in an appropriate form for recovery of such amounts where it would be decided whether the appellant is liable to pay such amount to the respondents or not, The forum referred to in the observation can obviously be only either a civil court or an arbitrator, as the case may be, since it is well settled that a Writ of mandamus und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g refund of money due from the State on account of its having made illegal exactions, that they did not find any good reason to extend the principle, and they would hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right. In the present case before us. the petitioner challenged the recovery or adjustment of the damages claimed by the respondents from out of the amounts due to the petitioner under other pending bills, and we have held that the respondents had no power or right to so recover or adjust under the contract. But, the further relief sought by the petitioner by way of payment of the amounts due under the pending bills is a distinct and independent relief and is not consequential upon the aforesaid recovery or adjustment being held to be without power or right. (19) Further, while the adjustment or recovery of the claim of the respondents for damages was without any right or power conferred by the contract and, Therefore, de hors the contract, the refusal of the respondents to pay the amounts due under the other pending bills was not de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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